Shares of fuel cell maker Plug Power (NASDAQ: PLUG) tumbled 10% in early trading on the Nasdaq Thursday, before recovering to a (still sizable) 7.1% loss as of 1:05 p.m. ET, after a team of analysts at Susquehanna downgraded the stock from positive to neutral.

Susquehanna also cut its price target on Plug stock in half, to just $4.50 per share.

Better late than never?

Reports on Susquehanna’s reasons for the downgrade are a little confusing. The Fly, for example, quotes Susquehanna saying renewable energy stocks are fighting “headwinds” in the residential market. But Plug Power actually doesn’t do a lot of business selling fuel cells to residential customers. Its bigger businesses involve selling fuel cell powered equipment such as forklifts to industrial companies, and (more recently) producing hydrogen gas to use as a fuel source for its fuel cells.

It seems more likely, therefore, that Plug stock got caught up in a wider ranging review of renewable energy stocks, a sector into which Plug stock does fall. With Plug shares down 75% over the past year — and selling for less than half what Susquehanna previously valued the stock at — the banker may simply have decided to use a broader report on other renewable energy stocks as an opportunity to downgrade Plug as well.

Reinforcing that view, Susquehanna does admit that it is “late” in downgrading Plug.

Is Plug stock a sell?

It’s worth pointing out, though, that Susquehanna’s new price target of $4.50 per share actually implies there’s some upside in this stock, which closed within pennies of $4 last night. And in a curious aside, Susquehanna said it preferred to invest in “new capital” for Plug. What does that mean?

One clue may be found in an observation by The Motley Fool’s own Neha Chamaria earlier this week. Noting that Plug management has warned it may not have enough cash to continue operating as a going concern, Chamaria noted that management says it’s trying to raise new capital.

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This may be what Susquehanna is referring to. If Plug Power issues new shares to raise new capital — presumably selling the shares at a discounted price — then it would make sense to not buy Plug stock now, but rather wait for the new shares to establish a new floor price on the stock, and buy Plug stock only then.

That’s my read on Susquehanna’s report, at least. Personally though, given Plug’s 27-year history of losing money and burning cash, the likelihood the company will run out of cash in a matter of months, and its apparent plan to dilute shareholders with new stock and debt offerings to keep itself in business, I honestly don’t think I’ll be buying Plug stock at any time, or at any price.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Plug Power Stock Dropped 10% This Morning was originally published by The Motley Fool